Quarterly Estimation of Economic Efficiency and Target Export Structure for Luhanshchyna

Abstract

According to the data of 2017–2018, when capital investments of the Ukraineʼs districts were made public, two clusters were identified – production leaders of Luhansk region. According to the economic efficiency of industry and services (comparable agricultural data were not measured by the State Statistics Service), the stable leaders of Luhansk region are adjacent city of Rubizhne, Kreminsky and Novoaydarky districts, as well as adjacent Starobilsky, Belovodsky, Popasnyansky districts, where in the second and third quarters of 2018 indicators have improved. One of the clusters includes all higher education institutions of Luhansk region, except for institutions of Severodonestk and Lysyschansk, where wages are higher than the average in the regionʼs districts. Another cluster is a border cluster based on Novopskovsky district, as well as adjacent border districts – Markivsky and Milovsky, where in the abovementioned second and third quarters of 2018 indicators have deteriorated. It should be noted that the quarterly industry data for Novopskovsky and Milovsky districts were generated based on their quarterly population data and the quarterly industry aggregate data; the quarterly capital investments data for Milovsky district were generated in a similar way. After generation of the computing data for all the fifteen districts available, estimates of the Cobb–Douglas function parameters and regression residuals for the six quarters of 2017–2018 were found. For the contemporary Luhansk region, the labor production factor is much more important than the capital production factor, which emphasizes the role of human capital and related intangible assets. The results obtained lead to assumption that economic efficiency in the large cities of Luhanshchyna in general is lower than in the clusters identified. It means that Luhansk region needs new industrialization based on modern information and communication technologies, intangible assets, and human capital. Such industrialization and digitalization needs a comprehensive international cooperation. The export conclusions for Luhansk region as of 2017 do not differ from the conclusion as of 2011: it is promising to start exporting by product groups of footwear, leather goods, essential oils, meat, fish, watercraft.